Are the distribution rules for 401(k) and 403(b) plans the same as those for IRA plans?

By Denise Appleby AAA
A:

The distributions are different for IRAs, qualified plans and 403(b) plans.

For IRAs, qualified plans (such as 401(k), money purchase and profit sharing plan), and 403(b) plans, distributions that occur before the participant reaches age 59.5 are subject to the 10% excise tax (early-distribution penalty) unless the participant meets an exception. The lists of exceptions for each of the different plans share some similarities, but there are some differences as well.

Distributions from IRAs are left to the discretion of the IRA owner and can occur at any time. For qualified plans and 403(b) plans, the participant must meet at least one of a list of requirements before he/she can receive distributions from the plan.

For the list of exceptions for IRA distributions, see our IRA tutorial. Also see our tutorials on qualified plans and on 403(b) plans - each one devotes an entire section to distributions.

This question was answered by Denise Appleby
(
Contact Denise)

RELATED FAQS

  1. Under what circumstances will a contingent beneficiary receive an insurance payout?

    Learn the different types of contingent beneficiaries and what conditions must be met for these beneficiaries to receive ...
  2. How does a defined benefit pension plan differ from a defined contribution plan?

    Learn the differences between defined benefit plans and defined contribution plans when reviewing employer-sponsored qualified ...
  3. What are the best ways to pay off my mortgage quickly?

    Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ...
  4. What are the advantages of an index fund over an ETF?

    Diversifying a portfolio is one of pillars of investing basics, and an index fund can provide an investor with exposure to ...
RELATED TERMS
  1. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  2. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  3. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  4. Gold IRA

    Definition of Gold IRA
  5. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  6. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...

You May Also Like

Related Articles
  1. Options & Futures

    Options and Roth IRAs: Do's and Don'ts

  2. Professionals

    Who Wants to be a 401(k) Millionaire?

  3. Professionals

    Are Longevity Annuities in 401(k)s a ...

  4. Mutual Funds & ETFs

    Greedy on the Dollar? See This Leveraged ...

  5. Trading Strategies

    American Express: Headwinds and Tailwinds

Trading Center